The financial services industry is in the midst of a significant transformation, accelerated by the COVID-19 pandemic. And given the key role digitisation plays in the financial lives of more and more of the world’s population, electronic payments are at the epicentre of this transformation.
Payments are becoming increasingly cashless, and the industry’s role in fostering inclusion has become a significant priority. Payments also are supporting the development of digital economies and are driving innovation — all while functioning as a stable backbone for our economies.
Sending a text to pay for a bus ticket in Turkey, using a QR code to pay for groceries in China, or tapping a sales terminal with a mobile phone in the US, even the humble contactless card was prevalent in the EU and other regions.
Even before COVID-19, these ways of paying for goods and services were evidence of a steady shift to digital payments— a shift that might ultimately lead to a cashless global society. Global cashless payment volumes are set to increase by more than 80% from 2020 to 2025, from about 1tn transactions to almost 1.9 trillion, and to almost triple by 2030, according to analysis by PwC and Strategy&.
Asia-Pacific will grow fastest, with cashless transaction volume growing by 109% until 2025 and then by 76% percent from 2025 to 2030, followed by Africa (78%, 64%) and Europe (64%, 39%). Latin America comes next (52%, 48%), with the US and Canada growing least rapidly (43%, 35%).
This means that by 2030 the number of cashless transactions will be about double to triple the current level, across regions.
During COVID-19 lockdowns, many people adopted digital behaviours, accelerating the proliferation of mobile-first digital economies and rendering cash even less relevant to daily life than it already was (although in less developed economies, cash remained essential).
In the global survey of banking, FinTech and payments organisations, 89% of respondents agreed that the shift towards e-commerce would continue to increase, requiring significant investment in online payment solutions. Not only that, but they agreed (97%) that there will be a shift towards more real-time payments.
Underneath the shift to cashless lies a larger, more profound change. Not only are traditional ways of paying for goods and services — including the humble paper check and analogue invoices — set for radical transformation, but the entire infrastructure of payments is being reshaped, with new business models emerging.
That reshaping involves two parallel trends: an evolution of the front- and back-end parts of the payment system (instant payments; bill payments and request to pay; and plastic cards and digital wallets).
And a revolution involving huge structural changes to the payment mix and ecosystem (emergence of so-called “buy now, pay later” offerings; cryptocurrencies; and work underway on central bank digital currencies).
Both evolution and revolution are sweeping the globe, but in different ways and at different paces, creating a complex payments matrix. Many organisations are trying to figure out where to play — and win — in that matrix, as evidenced by the intense level of merger and acquisition (M&A) activity since 2017.
The post Cashless transaction volumes will more than double by 2030 appeared first on Payments Cards & Mobile.